Business

McCarran poised to hatch business incubator

McCarran managers reject all bids to replace store
After deciding during the summer to replace the Tentation store, McCarran International Airport managers put out the standard proposal requests for the space.

The result: 17 responses, seven of which came from companies that lease locations elsewhere in the airport. Rather than go with what Clark County Department of Aviation director Randall Walker called the "same people doing the same concepts," all the bids were rejected and the process will start over at an unspecified future date.

Until then, Tentation, which sells apparel accessories for $10, will remain in the Concourse D spot on a monthly basis for as long as three years.

One of the bidders that finished well out of the running, diversetelevision.org of Las Vegas, protested the decision to county commissioners. President John Michael Otero had submitted an idea for an electronics and entertainment download store that would highlight local artists.

"To accept and vote in favor of (rejecting all bids) would be a horrible act of discrimination against the Southern Nevada small business and minority owners as well as the African-American, Hispanic and Asian community," Otero said.

However, according to the analysis of the bids, Ortero's proposal came in with a low score because of the typical problems faced by startups trying to crack into airport retailing, including little financial and operating history and rent potential for the airport. These are all factors that are given numerical grades when ranking bids.

LAS VEGAS REVIEW-JOURNAL


Related Content

By Tim O'Reiley
LAS VEGAS REVIEW-JOURNAL
Posted: Dec. 21, 2011 | 2:02 a.m.
Updated: Dec. 21, 2011 | 8:50 a.m.

After making slow headway in signing small, local retailers through the standard bid process, McCarran International Airport will try a new approach: a business incubator.

The Clark County Board of Commissioners on Tuesday approved a search for a manager to operate what was termed an incubator by overseeing eight pushcarts which will be scattered throughout the airport.

The carts would be reserved for businesses that do not currently have a presence at the airport but meet still-unspecified small-business standards.

The idea took root a couple of months ago, Clark County Aviation Director Randall Walker said, when the top seven bids for a shop space near Concourse D were companies that already have stores elsewhere in the airport. Largely because of that, all of the bids were rejected on Tuesday.

It often costs hundreds of thousands of dollars to finish and stock a full-fledged airport store, generally well beyond the means of individuals. In addition, airport experience counts significantly in the regular selection process because the business techniques are often much different than in typical shopping centers.

Having a manager install carts, which would require a retailer only to stock the shelves and turn on the power, would slash the entry expenses. If the incubator works as designed, it would let small businesses "have a better opportunity to compete for ... future in-line stores at the airport," Walker said.

By starting small, the carts are supposed to give retailers a chance to build their operational and financial resumes, not only boosting their scores in bid proposals but giving them a better chance at landing bank financing.

Another important factor in grading bids is how much rental income a store can generate for the airport, something very difficult for a new business to prove.

"It's a different marketing model and a different business plan (at an airport)," said Commissioner Chris Giunchigliani. "Businesses that might make it in the outside world have a very difficult time making their rent and so forth at the airport. Then it looks like a failure. We'd rather do it where we are supporting a particular business."

Several other airports across the country have gone to carts, said Ann Ferraguto, a principal in the Alexandria, Va., consulting firm AirProjects, including Philadelphia, Seattle and Washington, D.C. They not only act as incubators, but also as outlets to test new lines of merchandise on a limited scale or to sell items that don't warrant a full store, such as cellphone accessories.

"It's a way to give smaller companies a start without a huge capital investment," she said.

She did not know of any statistics to measure how many startups have graduated to larger stores. But she said that one of the best-performing stores at the Seattle-Tacoma International Airport, Fireworks, started as a cart that stocked the work of Washington state artists.

Trying to exclude incumbent retailers from new-store openings would risk wading into a legal swamp, said Walker .

The carts would be spread throughout the airport. At this point, however, the airport spaces are in the crowded Concourse C, which is used entirely by Southwest Airlines.

Contact reporter Tim O'Reiley at toreiley@reviewjournal.com or 702-387-5290.

Comments

Registration Notice: The Review-Journal has implemented a new registration procedure that requires all existing and new accounts to validate and login using Facebook. Visit the Registration FAQ for more information.
Terms & Conditions

The following comments are provided by readers and are the sole responsiblity of the authors. The Review-Journal does not review comments before publication nor guarantee their accuracy. By publishing a comment here you agree to abide by the comment policy. If you see a comment that violates the policy, please use the Report Abuse button.

Some comments may not display immediately due to an automatic filter. These comments will be reviewed within 24 hours. Please do not submit a comment more than once.

Note: Comments made by reporters and editors of the Las Vegas Review-Journal are presented with a yellow background.

  1. best job in town Dec. 21, 2011 | 3:37 p.m. Report Abuse

    Why were the existing store owners rejected? Why does randy not like the business that already have locations in the airport?

Wednesday, May 23, 2012
Clear Clear, 89° Weather Forecast